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Wake Up: Your Home May Not Be Your Asset

Do you remember how you felt when you bought a new home or celebrated a friend who got the keys to their new home?


And then the feeling may have slowly faded away when you realized you were trapped with a life-long mortgage a.k.a. death pledge.

Ask yourself this: Is your home putting more money in your pockets ? If not, it may be a liability instead of an asset.

If you’re thinking about taking the real estate exam so you can become familiar with the home buying process and laws, here are some resources for you:

Home ownership may not be as attractive as it appeared to be while you were sleeping. When you realize that a home is an asset to the bank and a liability to you, you’ll start to look at home ownership differently.

And if you understood how 30-year mortgages may be the biggest money grabber in U.S. history, you wouldn’t be so quick to add it to your American Dream vision board until you have a plan to make it work for you.

Don’t get me wrong. Owning a home is a great luxury that can provide the next generation of individuals with a better living environment than previous generations have ever had. It can break generational curses and unlock endless opportunities. But you have to first understand the marketing behind ownership and why it’s not an asset for everyone.

Mortgages Can Be a Deadly Marriage If You Don’t Understand How it Works

Don’t sign your life away until you know exactly what you are signing up for.

It’s like going into a marriage without any idea who you are marrying.

Mortgage comes from the French term “mort-gage” meaning death pledge. How morbid? That’s probably one way to describe how you feel when you’re tied down and unable to fully enjoy life because you’re constantly worried about mortgage payments.

It’s called a death pledge because you traditionally had to work until you died to have the privilege of owning a house. It can take over a quarter of your life to pay off your home if you seal the deal on a 30-year mortgage.

Securing a 30-year mortgage sounds like a great option because you get to extend your payments over a longer period of time, resulting in lower monthly payments.

The other side of a mortgage is the interest you have to pay every month. You think you have a $100,000 mortgage but your interest payments leave you with a $300,000 mortgage.

And there are consequences if you can’t commit to your monthly obligations. A divorce occurs. The bank takes your property away and you’re left with a broken heart because you thought the home would be yours “til death do us part”.

The Math Doesn’t Make Sense

Let’s calculate what you are really paying for your home. Let’s say you have a 30-year mortgage at 8%. The home is on the market for $200,000.

Amount: 200,000

Term: 30 Year

Interest: 8%

Monthly payments = $1468

Results: The interest payments inflate the real cost of a $200,000 home to more than $528,000. You may qualify for a tax write off but is the write-off worth an extra $300,000 expense? 

Don’t Get Caught in the Mortgage Debacle

If home ownership is your goal, make sure you don’t have a extremely high interest rate and that it doesn’t take you 30 years to pay your home off or else you’ll be giving away thousands of dollars in the form of interest.

Call your financial coach and mortgage lender to find out how much you would need to add to your principal payment each month to pay off your mortgage in less than 20 years. Then, ask how much you would save in reduced interest costs.

Turn Your Home Into an Asset

Your home doesn’t always have to be a liability. You have to know how to use what you have to get what you want.

Your home can make you money if you rent out space to other people. Air BnB has become very popular because homeowners have been able to rent out parts of their house for a short period of time. Renters avoid long-term commitments and get a cozy experience that makes them feel like they are at home.

Portions of your home can be used as business space. This space can help you generate more revenue by allowing you to have inventory on hand or the space to provide services from the comfort of your home.

If you’re a real estate investor, you’ll be able to put money in your pockets every month in the form of rent and turn your property into an asset. But be mindful of the impact of not having tenants for an extended period of time and the costly repairs that may come with the purchase of older, unkept properties.

Are you thinking about buying a home? Do you need help reviewing your assets? Remember, If you own your home and are bombarded with utility payments, taxes, and maintenance that doesn’t produce any money in your pocket, you have to question if the property is an asset or liability.

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Disclaimer: Wealthy Women Daily is solely educational and informational, and is not intended to give investment or trading advice of any kind. Not all asset classes are suitable for all investors. Wealthy Women Daily is a research academy that provides you with the data and analysis you need to make an informed investment decision. It is your responsibility to talk to an expert to understand how specific investments will impact you during tax time. 

About Charlene Rhinehart, CPA

Charlene Rhinehart is a Certified Public Accountant, Founder of Wealthy Women Daily, and Editor-in-Chief of the Dividend InvestHer and The Wealthy Woman Investor. Charlene is currently the Chair of the Illinois CPA Society Taxation Individual Committee. With over a decade of experience in the financial services industry, Charlene is one of the few leaders who design insights specifically for the woman investor. Charlene’s work has been featured in a variety of publications including the Huffington Post, Black Enterprise, and the American Institute of Certified Public Accountants. In 2019, Charlene released her book “Dividends Are a Queen’s Best Friend”, on Amazon.

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